Bradley Murdoch, the man charged with killing Peter Falconio, discussed ways to dispose of a body after the British backpacker disappeared, a court heard yesterday.

Bradley Murdoch, the man charged with killing Peter Falconio, discussed ways to dispose of a body after the British backpacker disappeared, a court heard yesterday.

James Hepi, a former housemate and business associate, told Mr Murdoch's committal hearing in Darwin that the two men had a conversation on the subject. He also testified that Mr Murdoch went on one of his regular outback trips in July 2001, at the time when Mr Falconio and his girlfriend, Joanne Lees, were ambushed by a gunman north of Alice Springs.

When he returned to his home in Broome, in Western Australia, Mr Murdoch appeared "edgy", Mr Hepi told Darwin Magistrates' Court. The same day he radically changed his appearance, cutting his collar-length hair very short and shaving off his moustache. He also took his pick-up truck to a workshop and had it modified, removing the tray and canopy.

Mr Murdoch, 45, a former mechanic, is accused of shooting Mr Falconio and trying to abduct Ms Lees after stopping them on the isolated Stuart Highway at night. Despite an extensive search, Mr Falconio's body has never been found.

Mr Hepi said that when Mr Murdoch returned to the house they shared in Broome, about 30 hours after the murder, news about the missing backpacker was reported on television. "Brad volunteered the information up that it wasn't him," he said.

The alleged conversation about disposing of a body took place at a later date. The Crown prosecutor, Rex Wild, QC, asked Mr Hepi what was said. "How to get rid of them," he replied. "To put them in a 'spoon drain' on the side of the road and cover them with dirt." He explained that these were drains that allowed water to run off so that roads did not flood.

He told the court that, around the time of Mr Falconio's disappearance, he saw Mr Murdoch in a shed on his property in South Australia, making handcuffs out of wire cables. Shown a replica of the handcuffs that Ms Lees has alleged her assailant used to restrain her, he said they were "very similar to the ones I saw in my shed".

He also testified that Mr Murdoch owned two guns, both revolvers, which he carried in a holster beneath his shirt or kept in his truck. Ms Lees has said that the man who waved down the couple's camper van put a long-barrelled, silver revolver to her head.

The two men glared at each other after Mr Murdoch was brought into the dock and the latter shook his head during Mr Hepi's evidence. The pair fell out in late 2001, and Mr Murdoch's defence lawyer, Grant Algie, accused Mr Hepi of setting Murdoch up to claim a $250,000 (£96,000) reward and save his own skin in relation to serious criminal charges that he later faced. The court heard that Mr Hepi told Broome police that he would co-operate in relation to Murdoch if police helped him in turn. He subsequently pleaded guilty to the offence and received a suspended sentence.

Under cross-examination, he denied making false statements to police about Mr Murdoch. Mr Algie asked him whether he had seen his former friend as his ticket out of jail. "That's not correct," Mr Hepi replied. But he agreed that he would inquire about the reward if his evidence helped to secure a conviction.

Ms Lees has testified that the gunman had a dog in his truck, which she thought was a blue heeler. Mr Hepi said Mr Murdoch had a Dalmation cross, called Jack, which went everywhere with him. The dog was flighty and timid, he said, particularly when a voice was raised or a shot fired.

Describing the changes that Mr Murdoch made after returning home in July 2001, Mr Hepi said: "He shaved his hair back ... and cleaned up his face. The appearance of the vehicle changed dramatically. It was heavily modified."

Murdoch denies the charges. The hearing, which will determined whether there is enough evidence to send him to trial, continues today.

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